Today the TUC has launched a new bi-monthly Economic Report, which takes the place of the popular Recession Report. The first edition presents some of the main economic data and takes a look at the various manifestos have to say about jobs and welfare-to-work.
A weak recovery
During 2009 as a whole, GDP contracted by 4.9%. In the fourth quarter, it grew by 0.4%, with stronger than originally estimated service sector and manufacturing growth in December. The official first estimate of GDP growth in the first quarter of 2010, however, showed growth falling back to 0.2%.
GDP is still about 6% lower than it was in the first quarter of 2008 – since the second recession began, the UK economy’s lost output totals around £160 billion. The following chart shows how GDP, indexed to 2005, has been affected by the recession – a significant gap remains before we return to pre-recession levels of output.
The latest Bank of England summary of the reports they receive from their Business Agents around the country show that demand is still depressed. The Agents reported retail sales growth and spending on consumer services had eased off, possibly because the change to VAT had increased sales in the last quarter of 2009 at the expense of the first quarter of 2010. They expected tax increases to depress consumer spending and house buying was depressed by “the lack of mortgage finance, particularly at higher loan to value ratios.”
Business investment was being suppressed by the large amount of spare capacity, tight credit and uncertainty about future demand. Demand was growing in Asia, which represents only a small share of UK exports, but remained subdued in the USA and the Euro area – our main trading partners. The latest edition of the International Monetary Fund’s World Economic Outlook noted that the global recovery has so far relied upon intervention by governments and that there is a risk of that recovery stalling if this stance is not maintained.
|Indicator||Date||Most recent data|
|GDP, first estimate||1st quarter of 2010 (first estimate)||0.2% (quarterly growth)|
|ILO unemployment level||Dec 2009 -Feb 2010||2,502,000 (+43,000 on the quarter)|
|ILO unemployment rate||Dec 2009 -Feb 2010||8%|
|Claimant count||March 2010||1,543,800(-32,900 on the month)|
|Average Weekly Earnings (total pay)||Feb 2010||2.3% growth on the year (three month average)|
|Consumer Prices Index (CPI) inflation||March 2010||3.4% (annual increase)|
|Retail Prices Index (RPI) inflation||March 2010||4.4% (annual increase)|
|Public Sector Net Borrowing (PSNB)||April 2009 – March 2010||£152.8 billion|